Source: Daikang's strategic world, the original research newspaper "after the big rise, how do AH shares compare?" "

01 AH shares have the same static odds

As of 2023.2.1, the historical positions of the static odds of Hong Kong shares and A shares are basically the same: (1) in terms of PE valuation, both A shares and Hang Seng Index have been restored to near the average since 2010; (2) in terms of PB valuation, the Hang Seng Index is still at a net breaking level, while A shares as a whole is 1.66 times, both of which are at the level of average-1x standard deviation since 2010; (3) in terms of ERP, both of them are near the average center since 2010. (4) the AH premium index recorded 134, which is at the neutral level (60 per cent quantile) since 2017, the starting point of deepening connectivity.

02 the divergence of funds begins to widen

We have since 22.11.10 "dawn, AH shares bright ahead", 22.11.13 "Hong Kong stocks" dawn "hints that" Hong Kong stocks are much more flexible than A shares ".As of 2023.2.1, since the end of November last year, the Hang Seng Index has made an excess gain of 36% relative to the total An of Wande.

Since the restoration, the differences between the two have begun to grow. On the whole, the net inflow of southbound funds narrowed sharply to 507 million yuan in January 23, while the net inflow of northbound funds in January 23 was 141.2 billion yuan, still maintaining a substantial net inflow trend.

From a structural point of view:

(1) for the industries with large capital inflows from November to December last year, most of them turned to outflows or inflows narrowed significantly in January this year, such as Hong Kong stocks, information technology and real estate; while energy and finance, which were at the top of capital purchases in January, were the industries with lower capital inflows.

(2) in January this year, most of the industries leading the rise turned to a substantial reduction in outflows or inflows, such as information technology, raw materials, and so on.

03 the changing direction of the winning rate: "the growth and decline of one and the other", and Hong Kong stocks are dominant.

• This elimination: overseas liquidity has improved, and Hong Kong stocks are more sensitive to the decline in US bond interest rates.

Hong Kong stocks are more sensitive to interest rate fluctuations in US bonds than A shares.1) in the period of rapid decline in real interest rates for six rounds of US debt over the past 16 years (excluding this round), the average return of Hang Seng Technology is 33.9% > 28.6% of the gem.This round, we have judged that Hong Kong stocks are more flexible under the downward trend of US debt interest rates since 11.13 "Hong Kong stocks, dawn". Since 22.11, there has been a preliminary verification. 2) from an industry point of view, the IT / raw materials / non-essential consumer industries of Hong Kong stocks are more flexible.

• "that long": with the repair of the domestic economy, Hong Kong stocks are more flexible in profit.

Historical experience shows that the profitability of Hong Kong stock companies in the economic recovery and profit recovery cycle (2009 / 13 / 17 / 20) is greater than the "improvement flexibility" of A-share earnings.

04 this round of growth and decline deduction, the mapping for Hong Kong stocks will be more obvious

• "the other long": starting with the strategy of expanding domestic demand-- the "new economy" of Hong Kong stock market will benefit more.

23.01.06 "expanding domestic demand" leads the second stage of Hong Kong stock bull market "points out the connotation of this round of domestic demand expansion strategy." Including the total demand side force, restore the confidence of famous enterprises, promote consumption in a priority position, long-term consumption upgrading, innovative consumption scenarios and so on.

The industrial structure of Hong Kong stocks is more focused on domestic demand. Take the growth of Hong Kong stocks VSA shares as an example, the growth of Hong Kong stocks is more inclined to domestic demand, consumer "new economy", A-share growth, high-end manufacturing, domestic manufacturing demand and overseas exports.

• The appreciation of RMB is more clear under the joint action of "this elimination" and "other growth". Hong Kong stocks with high weights in the mainstream passive index benefit more from capital reallocation EM, and foreign investors buy Beta.

The downward period of the US dollar index ushered in the reallocation of international capital to emerging markets, and Hong Kong stocks had a greater weight in the mainstream international index. Hong Kong stocks account for 5 seats in the top ten weighting stocks of MSCI EM, and the allocation weights of Hong Kong stocks, financial real estate and "new economy" are relatively high.

05 from the elasticity of Hong Kong stocks "much larger than A shares" to "slightly larger than A shares"

Based on the fact that the gap between AH shares has converged substantially, the historical positions of the two odds are the same, and the winning rate of Hong Kong stocks is still better than that of A shares, we adjust from 22.11.10 to "Hong Kong stocks are much more flexible than A shares" to "Hong Kong stocks are slightly more flexible than A shares". It is still recommended to actively allocate Chinese capital stocks. In terms of direction, it is still based on the "three arrows" under the direction of improving the success rate of expanding domestic demand.

(1) expand effective demand: real estate leader and real estate sales completion chain (home appliances / furniture)

(2) medium-term expansion of domestic demand "consumption priority" long-term "consumption upgrading": optional consumption (gold jewelry / clothing / duty-free), optional consumption (beer / supermarket), health care (medical services / devices / innovative drugs)

(3) expanding domestic demand, "reconstruction" & "development": platform economy.

Edit / Corrine